The New Porgera Limited (NPL) has clarified certain matters related to the reopening of the Porgera gold mine that has been the subject of speculation and misinformation over the past week.
NPL in a media statement said the benefit-sharing terms agreed between the State, Barrick Niugini Limited (BNL), Kumul Mineral Holdings Limited (KMHL) and Mineral Resources Enga (MRE) to restart the mine, ensure a transparent and fair distribution of the overall economic benefits that will be generated by Porgera over its 20-year mine life.
Over the life of mine, PNG shareholders, comprising Porgera landowners, Enga Province and the State (including KMHL which will hold the equity in new Porgera on behalf of the State), will receive 53 percent of Porgera’s overall economic benefits. BNL will receive the remaining 47 percent.
At a gold price of US$1,800 per ounce, PNG shareholders would expect to receive nearly US$7.3 billion (Kina ~25.2 billion) over a potential 20-year life and US$2.8 billion (Kina ~9.7 billion) in the first 10 years. The current gold price is significantly higher at approximately US$2,170 per ounce.
“Importantly, BNL, the operator of NPL has committed to financing the capital required to restart the mine. Furthermore, once the mine has restarted, any additional loans made by BNL or its affiliates to NPL will be on an interest-free basis,” said BNL & NPL Country Manager, Karo Lelai
She said this means the State will never face a situation where it would be necessary to take out interest-bearing commercial loans to fund its portion of the capital needed for investment in the mine.
During the period between when the mine ceased operations in April 2020, until the reopening on 22 December 2023, BNL has alone funded 100 percent of the care and maintenance and preparatory restart costs totaling approximately US$677.6 million (Kina ~2.58 billion).
“The State, KMHL and BNL agreed that initially KHML’s dividends from New Porgera Limited (as well as the dividends paid to the entity jointly owned by Barrick and Zijin that holds shares in NPL) will be used to reimburse BNL for the care and maintenance and restart costs (other than some agreed on nonrecoverable costs).
“However, the other PNG shareholders are not affected by this arrangement and will receive their dividends as they are declared following the start of operations.”
Lelai added that in addition, NPL will be a significant taxpayer, being subject to a 32 percent corporate tax rate, in return for fiscal stability under the Resource Contracts Fiscal Stabilization Act, and an increase in the royalty from 2 percent to 3 percent.